Dhara Enterprises Vs Appellate Authority & Joint Commissioner, State Tax (Madhya Pradesh High Court)
ITC denied if buyer having knowledge of investigation going on against his supplier
The Hon’ble High Court of Madhya Pradesh in the matter of M/s Dhara Enterprises v. Appellate Authority & Joint Commissioner [Writ Petition No.27676 of 2019 dated May 12, 2022] has upheld the order passed by the Revenue Department imposing the tax liability on the assessee is valid on the ground that the assessee was well aware with the transaction alleged as ineligible on which the benefit of Input Tax Credit (“ITC”) was availed by him.
Facts:
M/s Dhara Enterprises (“the Petitioner”) has engaged in the business of Ferrous waste and scrap and is registered under the provisions of the Goods and Services Tax Act, 2017 (“the CGST Act”). A Show Cause Notice (“SCN”) was served imposing the tax liability along with the penalty on the Petitioner. Thereafter, the Petitioner preferred an appeal before the Appellate Authority (“the Respondent”) who vide order (“the Impugned Order”) dismissed the appeal. Hence the Petitioner had filed this Petition praying to quash the Impugned order.
Petitioner’s Contention:
- There is gross violation of the principle of natural justice, while issuing the SCN, when the authorities alleged that the Petitioner had availed some ineligible ITC, then they should have disclosed the transactions on which such benefit was availed by the P
- It came to know for the first time, on passing of Impugned order that the transactions were in respect of inward supply received from one M/s V.K. Enterprises, Chhatarpur (“the Supplier”) and liability under Section 74 of the CGST Act was fastened upon the Petitioner.
Respondent’s Contention:
